Slow, Steady Foundation Growth Seen in 2005, Expected in 2006

(April 24, 2006) A new report shows steady, but unremarkable growth for the foundation sector in 2005 and forecasts much of the same for 2006.

Foundation Growth and Giving Estimates: Current Outlook, published by the Foundation Center, found that foundation giving grew to $33.6 billion in 2005, a 5.5 percent increase from the previous year. Several key factors drove foundation giving growth in 2005:

Continued slow gains of the stock market;

Increases in the level of gifts to corporate and community foundations;

Giving of newly established foundations; and

Increased grantmaking in response to the Southeast Asia tsunami and the Gulf Coast Hurricanes.

Nearly 32 percent of foundations increased the number of the grants they made in 2005, a figure almost unchanged from 2004. Likewise, the 28 percent of foundations indicating an increase in the number of nonprofits they supported was also consistent with the previous year.

Despite this growth, assets of U.S. foundations increased by an estimated 2 to 4 percent in 2005, compared with a 7.1 percent gain in 2004 and a nearly 10 percent rise in 2003.

2006 Forecast

The slow growth of assets, along with the sluggish performance of the U.S. economy, will make it difficult for many foundations to significantly increase their giving in 2006.

Just over half of survey respondents expected to increase their giving in 2006. However, the share that expected to reduce their giving rose to 32 percent, up from 25 percent in 2005 and 18 percent in 2004.

The report concludes that overall foundation giving will probably only increase a few percentage points, and accounting for inflation, will be “pretty much flat.”

“Most foundations have not experienced a robust recovery in their assets,” noted Sara Engelhardt, president of the Foundation Center, “and the outlook for 2006 is uncertain at best. Some funders—notably community foundations—may show bigger increases, but overall giving will likely hold steady. In the case of community foundations, continued strong growth in their pool of donors and in exceptionally large gifts from their donor-advised funds will help them to maintain faster rates of growth in giving.”

About the Foundation Giving Survey

Giving projections for 2005 and 2006 reported in Foundation Growth and Giving Estimates are based on responses to the Foundation Center’s 2006 “Foundation Giving Forecast Survey” from more than 850 large and mid-size foundations across the country, combined with year-end fiscal indicators. The report also presents findings on actual 2004 giving and assets tracked by the Foundation Center for the almost 68,000 independent, corporate, community, and grantmaking operating foundations in the United States.

Foundation Growth and Giving Estimates is part of the annual Foundations Today Series on foundation growth and giving and can be downloaded at no charge from the Foundation Center’s website. The Foundation Center's mission is to strengthen the nonprofit sector by advancing knowledge about U.S. philanthropy, and the organization is supported by more than 600 foundations.